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Futures Volume 14 Issue 5 1982 (Doi 10.1016/0016-3287 (82) 90059-3) Ray A. Williamson - The Industrialization of Space - Prospects and Barriers PDF
Futures Volume 14 Issue 5 1982 (Doi 10.1016/0016-3287 (82) 90059-3) Ray A. Williamson - The Industrialization of Space - Prospects and Barriers PDF
THE INDUSTRIALIZATION OF
SPACE: PROSPECTS AND BARRIERS
Ray A. Williamson
THERE IS A GROWING IMPRESSION that the pursuit of space technology for useful
purposes is at a watershed-a feature which is noted by other contributors to
this volume. In sharp contrast to the situation of a decade ago, when the USA
decided to develop the Shuttle, it is now possible to contemplate seriously the
industrialization of space.
Two major developments, vastly different in character, have contributed to
this growing change of attitude towards investment in space, and have led to a
new optimism about mankind’s future in the space environment.’ First, the
technology has developed and begun to mature. Many of the technological
systems that were but dreams in the minds of the space visionaries a quarter of a
century ago have now proved their usefulness. Among the industrialized
countries, dependence on space technology is high and growing rapidly.?
Second, many countries other than the USA and the USSR now have flourish-
ing space programmes. There is therefore a much wider base ofinterest in using
space technology than ever before. However, at the same time that some evince
increased optimism, others are highly sceptical about the future benefits of the
development of space and cite major barriers to its industrialization.3
Ray A. \Villiamson is with the Of&x of Trchnoiogy Assessment (OTA), Congress of the United States,
Washington, DC 20510, USA. This paper is based, in part, on a report by the OTA, CiviiianSpace Pofiq and
~P~~icQ~~u~.However, the views expressed herein are not necessarily those of the OTA, the Technical
Assessment Board, or ofindi~idual members ofCongress. The author acknowledges the generous assistance
and advice of Richard DaiBelIo, Gordon Law and Adam Wasserman in preparing this paper. Philip
Chandler, Skip Jones, and Jean Monroe are due thanks for their helpful criticisms, as is Jannie Coles for
typing the manuscript.
public good will ultimately be better served if the private sector takes a much
more active part in the development of space and space technology. This paper
examines the role of private interests in developing and applying new tech-
nology for useful purposes in space. It also explores how government can
enhance and expand private sector involvement by making private access to
space more attractive and trouble-free. What barriers to private investment in
space exist? What incentives are needed? This paper also explores these issues
and discusses the pros and cons ofpossible policy initiatives. It is founded on the
following axioms.8
FUlURESOctober1982
408 The industrialization of space: prospects and barriers
What prospects are there for private investment and involvement in space? The
list varies greatly depending on the interests of the list-maker and how much ofa
visionary he is. However, it can generally be divided into those products and
services that would be available before the end of the century and those that
would be developed after AD 2000. Because visionaries often confuse the
prospects for the long term with the more immediate ones, it is important to
bear in mind that what we are able and willing to do in the next century will
depend directly on what technologies we develop between now and then.
For example, proponents of a solar power satellite (SPS) system have often
argued that we could have the first component of a system in place before the
end of this century. 10Perhaps we could, but it would require pulling out all the
financial and technical stops to get there. However, the development of an SPS,
if a system is ever built, will necessarily depend on our experience with the
Shuttle, with space stations, with new materials, and with many other tech-
nologies that are either under development or have not yet been started.” These
first have to be tried and proved and then experience gathered before the next
step is taken. On the other hand, although it is important to keep a careful eye
on the present for short-term benefits, it is also important to cast our vision
forward and attempt to divine what the future could be. Both kinds ofvision are
necessary for developing private investment and also for instituting government
incentives and policies.
The level of private investment in space will be driven by the amount of
investment in government programmes as well as by policy incentives. A
relatively high commitment from government will naturally result in a higher
interest in new space ventures among the private sector. Investment will also
depend directly on the technological developments that are achieved by
government programmes, eg the Shuttle, new propulsion systems, space
stations etc. The length of the list of private space ventures and the size of the
individual investments will also depend on the extent of international coopera-
tion and the number ofjoint ventures that are instituted to exploit the space
environment. It is likely that a higher degree of international cooperation will
be attempted, both by governments and by private industry because of the
FlJlURESOctober1982
The industn’aliza&ion ofspace: prospects and barriers 409
extremely high cost attached to developing space systems. One area that looks
promising for international cooperation between corporations in the research
stages, at least, is materials processing in space.12
Table 2 presents the major opportunities for industrial involvement in space
systems before AD 2000.13 Since most systems will continue to be developed,
owned and operated by the government, this list does not represent the full
range of possible space development. In this list, the dependence on the Shuttle
and associated components is strong.
Table 3 extends the list ofopportunities into the early part ofthe 2 1st century.
Here, there is a much greater dependence on large, unmanned and manned
space platforms, since I have assumed that by the 21st century, there will be
space platforms and space stations operated by several countries, regardless of
the near-term results of the current US debate over whether to build a space
station. It is also likely that there will be a second-generation Shuttle of higher
capacity and greater efficiency to transport more mass to orbit at cheaper unit
cost. Certainly, the further out in time we attempt to see, the cloudier our vision
becomes. These lists represent a deliberately conservative view since I
attempted to separate the probable from the possible developments of space
technology.
Applications syi3tsms/services
Transportation Expendable launchers before 1990; Ariane
now in service
Shuttle before 1985
Ground operations before 1985
Marketing before 1985
Ownership after 1QQO
upper stages now being marketed
and developed
Communications 3WO GHz System cl985
Large communications platforms after 1990
Remote servicing after 1995
Remote sensing General land remote sensing 1Q&l (SPOT), later
(active and passive) for US systems
Special purpose GSO platforms for after 1985
exploration, land use planning,
crop assessment
Weather (special purpose warning systems) after 1QQO
Materials
Processing in space Furnaces, processing modules 1985
New materials for now being developed
space structures
Structures Small multipurpose platforms for
manufacturing, testing (LEO)’
GE02 platfon (communications, after 1QQO
remote sensing)
Space power Photovoltaic systems
Thermal-electric systems
FllTlJRESOctober1982
4 10 Th industrializationofspace: prospectsand bamm
Applkstlons SptWWUseS
The most attractive future investments will be those for which an assured
market exists, and for which, in addition, likely profits are high. As noted, it is
these reasons that were responsible for the relative ease with which investment
capital was obtained for the lirst geosynchronous satellites. A similar condition
exists for certain high value pharmaceuticals or catalysts. A ready market exists
for these products. If it can be shown that they or other low mass, high value
products can be manufactured in space more economically than on earth, they
too will constitute attractive investments.
Many different successful incentives for overcoming the barriers shown in
Table 4, and for reducing the risk of the private sector, have been used. Most of
these incentives are in some way appropriate for space technology. The follow-
FuruREsoctobs?1962
The industrialization of space: prospects and barriers 4 1I
TABLE 4. BARRIERS TO
INVESTMENT IN SPACE
Technological
Uncertain technology
Systems tend to be complex
Uncertaintyof space environment1
Economic
High cost to reach space’
Market risksuncertain
High cost of technologydevelopment
Regulatory/policy
Government controlsaccess1
Status of civilianspace programmeuncertain’
ing discussion presents some possible ones designed to reduce these barriers. It
is necessarily a partial list, and focuses on the most important incentives for
space technology. Because this paper is written from the perspective of US
policy, the discussion necessarily emphasizes the particular needs and problems
of the US private sector. The private sector in other countries has related
concerns, but has available somewhat different institutional means to address
them.
FUlURESOctober1982
4 I2 The indutrialization ofspace: prospects and barriers
Designatede.@y
One way to involve the private sector in using space technology is to designate a
single entity to commercialize technology developed by the government or with
government funding. The development of satellite communications by Comsat
is an important example of this mechanism. However, as the OTA report
argues, “there is no single best model for commercializing space applications
technologies. The particular series of steps that led to the Comsat Corporation,
for example, though effective in promoting satellite communications, will not
necessarily serve as a paradigm for other technologies. Commercialization of
other space technologies requires that the special circumstances and different
requirements of each be considered in determining whether and to what extent
a particular system should be privately owned.“16
For example, if the Landsat system is turned over to a private entity, as is
planned by the current US administration, it may be in the best interests of the
USA to commercialize the space and the ground segments at different rates.17
Such a scheme was not considered necessary for communications satellites. In
another example, although US expendable launchers may be commercialized
by the private sector, it may be appropriate for the federal government to own
and operate the launch facilities and tracking and data relay systems until such
time as they also become commercially viable enterprises.18
Tax benefits
It may be possible to involve the private sector in the development and
operation of new space systems by altering the tax laws. Three of the main
incentives in the present US tax systems are depreciation allowances, invest-
ment tax credits, and the ability to deduct R and D outlays. By tailoring these
incentives to apply more generously to research on particular space systems, the
private sector may be encouraged to participate in research that might other-
wise involve too high a degree of risk. One of the main advantages of using tax
benefits rather than alternative devices to stimulate Rand D is that they involve
less direct government control.
Encouraging industrialconsortia
An obvious alternative to the more common case of projects directed by a single
firm is to encourage research joint ventures or indust~al consortia. Such a joint
venture would be a formal means to pool resources (~nan~ia1, technical, and
physical) and liabilities among the participating firms. The joint venture could
be established by manufacturers with other manufacturers or with sub-
contractors to do advanced research in space systems. Recently, more than a
score of the largest US computer manufacturers and their semiconductor
suppliers have formed such a consortium under the Semiconductor Industrial
Association to conduct advanced electronics research. SPOTIMAGE and
Arianespace are good examples of European efforts to use this technique.
However, the US antitrust laws may present certain barriers to such a plan.
Whether or not a joint venture violates the current antitrust laws is a function of
its design and the circumstances under which it is established. The articulation
FUl’URESOctoberl982
of a clear US government policy encouraging consortia and clarifying their
position with respect to the antitrust laws would greatly facilitate their use.
Ext~d~~g theJEA
The concept of the JEA has so far been applied only to materials processing.
Can it be extended to other profit-making activities in space? Two arrange-
ments, suggested by OTA,2* seem worth exploring.
FUTlJRESOCtObF19S2
The industrializationofspace:
prospectsand barriers 4 15
strating the utility of satellites for providing health care and educational
services, disaster assessment and relief, and emergency medical services to
remote locations. An arrangement with private industry to provide similar
public services in return for the launch of a new satellite could provide new
and expanded public service opportunities and could also eventually pro-
vide new markets for the communications industry.
l Royal arrangements. Another arrangement that has been suggested*’ for
making Shuttle operations profitable, and incidentally encouraging the
private sector to consider investing in space, is to provide free launch
services in return for a royalty payment on the net profit from a space
endeavour. This would have the effect of providing a substantial income for
the Shuttle from highly profitable ventures and at the same time not unduly
penalizing corporations whose enterprises do not work out as well. Such an
arrangement might also have the effect of reducing total government
investment in Shuttle and provide valuable experience for eventual transfer
of the Shuttle to the private sector.
1. C.L. Gould, “Space to benefit mankind, 1980-2000”, Advanced Earth Oriented Applications
Space Technology, I, 198 1, pages 49-64.
2. See Chapter 5, “Our dependence on space,” Civilian Space Policy and Applications (Office of
Technology Assessment, US Congress, OTA-STI-177, 1982), pages 105-109.
3. See N. Wilford, “The industrialization ofspace: why business is wary”, Nerv York Times, 22
March 1981; H.S.F. Cooper, Jr, “A reporter at large: Shuttle I, II”, TheNew Yorker, February
198 1, pages 43ff; 16 February 1981, pages 65ff.
4. J. Grey, “Implications of the Shuttle: our business in space”, Technology Review, October
198 I, pages 35-46.
5. Civilian Space Polig and Applications, op tit, reference 2, chapter 7.
6. Ibid, pages 28, 29.
7. “National space policy”, White House Fact Sheet, 4 July 1982.
8. R.A. Williamson, “Civilian space policy and applications”, Statement for the Record,
FUlURESOctober1982
$ I6 The industrialimtionofspace: prospectsand harriers
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